the business of college sports keeps on growing. espn is launching a new while -- network exclusively for the southeastern conference. tim tebow is lined up as an analyst. two bigound as we have stories in the second hour with the buzz feed valuation of $1 billion. could we be looking at another bubble? former m.i.t., a professor and his son are pleading guilty. it is why we are showing bernie made off. joining the u.s. in backing a replacement for the iraqi prime minister who is refusing to step down and acknowledge his successor.

alibaba is setting the stage for what is likely to be the biggest ipo in u.s. history. they are planning a three-confident roadshow for september 3. they are starting in asia. barclays might have to pay up to $3 billion to settle claims of misconduct according to sanford bernstein. they have been accused of rigging currency markets lying about dark pools and properly setting interest rates. we have breaking news on macy's. on whatman has more macy's is saying about their earning. standout has been a for earnings, but looks like this quarter was a misstep. six centsere $.80, below what analysts were anticipating. net sales did rise. they came in slightly short investments at 6.72 billion

dollars. the company is still confirming its forecast for the second half of the year and said comparable sales were up by about 4% in the second quarter. that is also a relatively strong number. says in theceo statement that the sales trend improved that macy's and bloomingdale's. the first quarter was marked by the terrible winter weather. most retailers have talked about some degree of pickup in the second quarter. if you look on the comparable sales number, excluding licensing, that was an increase of 3.4%. the company says it is still saying a struggling consumer to some extent, so it is going to focus on spending in the second half of the year. say expectations for the second half of 2014 remain on track with comparable

3%,es growth of 2% to however they were unable to make up for the shortfall from the second quarter in the third quarter, so it looks like a murky outlook. >> it does because they trailed estimates, but it is not hardly as bad as we saw with other retailers. what about kate spade. >> the interesting thing about kate spade is the results were strong, they were doing well, but it is a question of whether they will continue to be that strong. you see this across different industries and retail. we saw it with michael kors. this concern that rapid store growth, rapid customer adoption -- will that last. that is the question with kate spade. that is why you saw the rapid reversal yesterday as investors

started to turn toward the second half of the year and beyond and questions on whether they could continue that growth. >> it was kate spade saying we the first halfin and we will only see single-digit growth in the second half. that is a huge difference. lookspade is not the only into retail sales. we will get overall retail sales numbers in half an hour. >> overall retail sales numbers, and not just today, but tomorrow, a lot of retail earnings as well. walmart, kohl's, jcpenney's. macy's is just the first. what i have been hearing is sales picked up in july. is big question that remains what did retailers spend to get them there? accustomedave become

to a promotional environment, retailers like macy's have gotten customers to spend and getting those discounts. not every retail has gone that formula right. we'll be watching the sales to inventory figures for many of these retailers, we will be watching the margins for many of these retailers. if you look at the median forecast, we are looking at a contraction. >> thank you. julie hyman, our senior markets correspondent. let's get back to the ali baba. the countdown to the highly anticipated ipo looks likely to begin in september when the e-commerce giant starts its road show in asia. for more, leslie pickler has been following this from the very beginning. executives are proposing to start in asia. is that unusual? >> it is not unusual, but they

are looking to price on a monday to trade on a tuesday. apically we see starting on tuesday. they do things differently. the reason this date is significant -- remember eight/eight was good luck? 16 is eight plus eight. they also have some significant days in chinese history. the other days are not seen as lucky. this was the best option. >> so many things they have to consider. 8,y were going to do august but then they decided people were out of town. it is the summertime, maybe it is not the best time to bring in ipo of this size to the market. >> they were waiting for different rounds of comments. they decided to push it off until september.

yesterday we learned they renegotiated their contract, their arrangement with financial assets, and one of them is a paypal-like processor used on their site. they do not own that anymore. based on that often put it in a spun that offey and put it into a separate entity, but have an unlimited cap of a windfall they could receive from that. quick we know that is >> we know that ken sent had also ipo. will there be a duel? >> the valuation has gone up tremendously, and a lot of analysts say that is thanks to ali baba. on the other hand, they are not ones to shy away from pointing out the weakness of their competitors. these chinese conglomerates are

scrambling for different users, trying to beat out the other one at the punch. of bloombergker news on ali baba. thank you. the u.s. is expanding its ground presence in iraq, sending additional advisers to assess conditions. phil mattingly is with us from washington with more. who are these advisers and what role will they have? will be special forces, some marines. the role there was explained by secretary of defense chuck hagel yesterday. i would say it follows the criteria president obama has made very clearly. this is not any extension of any role for the united states other assist andd ways to

help advise the iraqi security forces, which we have been doing. >> now, betty, the primary role of these advisers will be the easy refugees, the 10th of thousands still stranded. there is an effort underway to assess how to get them off. one official told me dropping food and water will not be enough. there are too many out there. the questions for the u.s., iraqis, kurds, international players, is there a way to airlift or get them off the market -- mountain. >> what are the major risks the white house has to consider when expanding the u.s. role? >> it is a dangerous area. the majority of these forces are l, which the u.s. feels is more secure than it has

been. if the u.s. forces work in any way to extract these refugees from these mountains, you're putting yourself in the danger zone. the biggest concern is u.s. forces in advisory capacities upon an innocent comment on them to fire back. it is the worst case scenario. if u.s. officials pursue an active role, there is a real possibility that occurs. crexendo political process in baghdad, which is trying to get nouri al-maliki to step down and allies there needs to be new -- and realize there needs to be new leadership. the routero is political issues. will you have seen from u.s. officials have been interesting. there has been phone calls between the president and iraqi officials. in the readouts we have gotten, there is always a line or two

saying that if the political process moves forward, if the nominee for prime minister haider al-abadi is able to form a coalition government, more help will be on the way. the u.s. is pushing it forward. >> we have talked about the criticisms on obama's foreign policy, the situation highlighting it, clinton with the "don't do the stupid stuff" comment in "the atlantic," and david axelrod said yesterday "do not do stupid stuff needs stuff like occupying iraq in the first place, which was a tragically bad decision." hint, hint, hillary clinton had devoted to go to the rock. -- had voted to go back to iraq. >> nostalgia.

hillary clinton called the president and said the interview was not intended as a shot at him. the simple fact of the political matter is she will have to create space. she was always kind of hawkish. when you have heard from obama advisers over the course of last six months in dealing with people like john mccain or lindsey graham, they feel like people are brushing past the idea that there is no appetite for ground involvement for u.s. troops. that iraq was a massive mistake people are not paying attention to, and with david axelrod, he saw the frustration coming out. out,e tried to smooth it calling the president now, saying they would try to get out. at aey will see each other party. we do not know if they will hug they will see each other. >> and if anybody has pictures,

you will have them. >> i will tweak them out immediately. >> white house correspondent phil mattingly. moving and shaking, more microsoft ceo steve ulmer -- he is not just the newest owner in the nba, but he is a new donor backing a them control -- a gun mission in washington. in the meantime, he has now become the owner of the l.a. clippers. that deal closed yesterday. he paid $2 billion for the team, four times more than has ever been spent on an nba franchise. purchasee more on his and highlights from an interview with the interim clippers ceo dick parsons in a moment. macy's with a man's and retail sales -- with a miss and retail sales coming out in a moment. we will see what all of this has to say about the american

consumer. ♪

one stock we are continuing to -- is macy's.ved down nearly 5%. retail sales numbers are coming up momentarily. we are joined by the author of "bargain fever" where he explores the obsession with deals, coupons, and whatever else to get the most bang for your buck. julie hyman went through the numbers. pretty bad forecast cuts. >> initially the company said they were confirming their forecast, that is not the case for comp sales. they say they will rise 1.5% to 2%. this is on top of a quarter

where earnings disappointed. they might've gotten the traffic and sales, but they had to cut profits to get it. margins did increase. it is still higher than competitors, but it still hunger for the bargain that you were talking about. >> right. mark, i have to say -- none of us have a position here at macy's, but our production team has gone -- was talking this morning, and to what he has gone into a macy's and has been impressed by the stores at all. >> i have been impressed with the service. i was in with a visitor from england. you bring someone to a macy's, and it is a tourist site. we were shopping. we got to $80. we were looking at the

salesgirl, and she said you are nice, you could probably spend $100, i will give you the discount. i think the stores do need a little bit of work, but i think we need to not beat macy's up that much. >> ok, who can we beat up? >> epic we can beat up old jcpenney and love new jcpenney. i think poor target is going to be one of those companies we watch from a distance and feel uncomfortable for, but watching a reality show when people behave badly. >> i want to rise -- watch the train wreck. becauserp that target it's nearby. >> i am rooting for target. >> it used to be edgy. we were talking about how target has lost its edge. beright, and it has to claimed that because it did have the upper tier of the discount

market and has lost a lot of its cachet. >> i would say that i think macy's has taken some of that cachet because macy's has done some of its own brilliant own label brands. they have celebrity designers, not just from the fashion world, but justin bieber, donald trump -- it seems like the collaboration is no longer with just the fashion world. >> couldn't just be a major decline among retailers in general? >> i was mentioning -- i was mentioning kate spade. the stock went down 25% because the forecast was going to be so low. of kate, i'm a big fan spade. >> you rolled your eyes at me. [laughter] >> look at how the brand is positioned. comeback story of kate spade

is a story. it was a hot brand in the 1990's that no one would touch, and suddenly it is cool again. we need to take a deep breath and get kate spade room. that incredible growth, it is unsustainable, and it should be. >> i do not know if you can extrapolate kate spade to the rest of the kelp. using his phenomenal course where rapid growth is slowing down to some extent. that said, that are not know we are on a precipice, but it is more like the broader economy, where he will be a long, slow, crawl back to growth for many retailers, and the question is at what price it will come. >> thank you, julie hyman, our senior marcus correspondent, and also, mark ellwood, the author of "argan fever-how to shop in a discounted world -- "bargain fever -- how to shop in a discounted world perk up coming up, -- world."

coming up, more on a disk -- on a challenge for alibaba. ♪

>> first. bloomberg. ,"u are watching "in the loop live on bloomberg television, and streaming on your phone and bloomberg.com. good morning. i am betty liu. japan's economy is contracting tricking 2.6%.dp consumer spending stumbles. posted a surge. smartphone gaming and messaging revenue. moreadded 21 -- they added

monthly users on the population of the u.s.. the legendary actress lauren bacall died yesterday at the age of 89. she was known for hundreds -- voice. throaty she made her screen debut alongside husband humphrey bogart at a hollywood screen legend. and it is 26 minutes past the hour. bloomberg tv is on the markets. as i mentioned, in just a few moments we will get a better glimpse of how the consumer is spending these days. retail sales are going to be out. s&p futures, right now, they are holding up pretty well given the earnings disappointment including macy's. up about .5% for s&p futures. we are on the markets again in 30 minutes. as we have been talking about, the l.a. clippers have a new owner. former microsoft ceo steve ballmer.

yeah! this is after a california judge determined that shelley sterling had the ability to sell on behalf of the trust. trish regan spoke to both of them. he will not be a wilting flower keynoter. he will be on the sidelines pumping his fist. >> you know it. i spoke with him on the phone. .e gets excited about things he was extremely excited yesterday on the phone. he could not be happier, or perhaps more relieved the deal had gone through. maybe it is my otrsonality type -- until i d every i, it is hard for me to believe it is done through. he did say he would figure out how to support the team and take

it to the next level. he said you have to be tenacious, and you to keep pushing, pushing, pushing to take it to the next level and that he will enthusiastically support the team. would be on that he the sidelines, he said you had better believe it, how great is it when your job is to go to the basketball team? i said in terms of managing the team, will you be that involved, and he said he is not a basketball expert, so he will not be designing plays, but he is enthusiastic. it is like product development, you support, occasionally give them something to think about. they talked -- he talked about doc rivers. stay.lly 100%. will >> he was a beacon during the controversy. >> he really was. parsonsnterim ceo dick has also pointed to doc rivers

as the glue that held that team together. i you spoke to parsons as well -- >> you spoke to parsons as well. >> i did. we spoke about steve ballmer, and what type of owner he was going to be. we emphasize this is someone that will support the team and have the financial wherewithal to support the team with as well. support the team as well. >> i think his energy will be somewhat infectious and supportive of, you know, everybody else's desire, and then i'm not going to say that steve is just going to sit and open his checkbook. in ba has roles in terms of how much you can spend, where, and how much you can pay, to keep some kind of parity within the league, but steve will be there to the extent that the team will not fail. let's put it that way, for a lack of resources. >> you can say that again. $2 billion spent for the team. i said to him, $2 billion,,.

this is, by the way, about four times than any previous team has done. >> he raised the value of every other team in the nba. >> made everybody us very happy, but he said he is thrilled. it is the price he paid. he put out a huge laugh and he said "i have a history of looking at tech companies. i would say basketball teams are lower risk." >> we have to get to some breaking news, but quickly you will be in atlantic city tomorrow, atlantic city "lights out." >> covering the challenges that city is facing. i will be there live all day. >> trish regan, thank you so much. we have breaking news on retail sales numbers -- july retail sales headline figures unchanged. so, not great news here on the consumer. the expectation was for a rise of .20%. core retails undershooting

economists service. julie hyman, give us more details. disappointingeed and that is because expectations going into this report were relatively high. i was talking to a retail analyst who said the read on july had been pretty good. that was not necessarily the case across the board. overall, they came in unchanged. autos back out autos or and gas commuted a rise of .5%, half of what was expected. we did have revisions when you gas.out autos and that is perhaps one small bright spot. i'm sorry to go through the breakdown of the various categories. -- i am starting to go through the breakdown of various categories and we see declines in electronics sales, in decline -- and department store sales. that is an area to watch. general merchandise down .5%.

easy restraint when it comes -- you see more strength when it comes to health stores, appliances. up arrow, which had been able weak spot -- apparel, which had been a weak spot. we heard numbers from gap that were a little positive. nonetheless, you are still talking about weakness. we will give details. we heard from macy's, that was disappointing, and tomorrow we will hear from nordstrom, jcpenney, kohl's. that will give us more granularity when it comes to how the consumer is spending at those department stores. >> thank you, julie hyman. coming up, it is a television network for a certain type of sports fan -- this channel has everything you ever needed to know about the southeastern conference. guys it has tim tebow, here it is that good or bad? we will also hear from usa

goalie tim howard. he will tell us about his future. stay "in the loop." ♪

>> team usa goalkeeper tim howard -- remember him -- he had an incredible performance against belgium in the knockout stage of the world cup. bloomberg news caught up with tim howard and asked him what he plans to do once his celebrity status settled on. that settles down. >> -- settles down. >> once i leave the spotlight, i will see what is next. >> what is next for tim howard? we know what is next for espn, with a new network debuting debuted -- dedicated solely to the southeastern conference. top-tier talent has been lined

up including a massive list of providers including directv, dish, time warner, cable, cox, and comcast. justin connolly, it's been senior vice president, joining us. >> thank you for having me. >> you have seen other regional networks fight with their distributors, pac-12 and big ten . how important was it to make sure you got that distribution? >> critical. we feel good about where we are. we have 24 hours to launch and in most major markets consumers have at least three options. we have had tremendous success and it is a tribute to the fans of the southeastern conference, and really, the demand in the interest they have shown for this network. >> you broadcast games from the southeastern conference all over your network. will be different -- what will be different about this event --

this network? >> the volume of live events we will do is in many ways unprecedented. we will do over 1000 in year one. we will surround that with top talent. we have hired tim tebow, greg mcelroy. one thing we do well at espn is storytelling, and that will be a showingent in terms of -- >> why is that a key element question mark >> a different -- element? >> it differentiates us in terms of getting into the history of athlete, what is going on on these campuses, so it is one thing we are focusing on to make this different to what you might see on espn or another network. >> what were the conversations like that you are having with cable operators? what were they like? >> at the core, what they really do is try to way whether this

network in and of itself will contribute to subscriptions that they sell, and the conversations are about selling that to them. the conversations were done about social media. fansu saw the way the sec were active on twitter, facebook -- it's -- >> saying they want this? >> not just they want this, but they need it. of four ncaa two final four teams in basketball. two teams in the college world series for softball. >> i felt like they were missing out. >> that is right. they want more. it is the most avid college fan base in the country. >> not to get too cynical, but they did not help that you are part of espn, which is part of walt disney? >> if you look at each of the

deals that have been done for this network, you will see many were done on a one-off aces. some were done in the context of broader negotiations, but we did both, including when we announced the network back in may. erse support, and that helped us build the marketplace. >> how do you feel about the recent ruling by the judge saying that college athletes should get a piece of the pie? >> i have not spent a lot of time on it. my understanding is that focuses on the relationship with the athletes and the schools. my focus has been getting this network launched, and we have a lot of work to do to go live tomorrow and that has been the focus of my time and energy over the span -- past several months. >> what about the schools themselves, the energy they have been putting into? >> we have build a platform where the schools have an

opportunity to show content on campus. they have been great partners on that. it is really ranged, depending on the school. some have facilities that were broadcast-ready already. they did not have to upgrade. >> exactly, and each of the schools has stepped up to make this as robust as possible in terms of the content we will provide. >> out of the conversation go with getting tim tebow on? [laughter] >> if you look at his resume as a football player, he is the most decorated football player in sec history, which says a lot. the ability to have him -- he has been in almost every set -- campus -- stadium that we're going to cover. we actually debuted him last year. >> how did he do? >> it is a funny story. i do not know if it is beginners luck or a harbinger of things to

come, but he predicted the score within one point. i think he has great things ahead of them. clicks you hope he will do that again this year. >> absolutely. every weekend. see you., great to >> thank you for having me. >> justin connolly, espn senior vice president. coming up, gamers are souring on "candy crash." we will see what that -- "candy crush" and we will see what that means for king digital. we will go inside of the region to see how companies located near the gaza strip are faring. ♪

♪

they are renouncing their citizenship, even though they are keeping most of their business here. ,t is just an accounting trick but it hurts our country's finances, it adds to the deficit, and it sticks you with the tab. ♪ >> back on israel, israel's iron dome defense system has protected most of the residents living in the country's border with gaza. willem marx looks at how the conflict is affecting companies that. -- there. >> around 3200 rockets have fired out of the gaza strip over the past five weeks with residents of southern israel often the intended target. mayiron dome defense system detect most people here, but the impact of the serial assault is

still damaging to local business. >> it is not easy. you can see the parts. if it hits you, it could kill you. >> he is an israeli-american, a father of three, and lives in a near the gaza strip. he returned to the company's main plant where his colleagues have been struggling to fulfill the daily quilt quota. >> you do not work as quickly. you run to the bomb shelter five or six times a day. >> nobody wants to lead fulfilling orders, but one conflict consequence of his orders are falling. salesast month, companies dropped 30%. $2is looking to spend million to renovate this factory space, but when it comes to investing, their unusual factors -- there are unusual factors

including security. the military could take over your office building and there is uncertainty. >> cash flow, tax payments, the impact is quite severe. av goldstein runs a manufacturing firm justify further south -- just further south. national politics play a role in his decision. >> it is a combination of trying to be very competitive on one end, but on the other hand it is a long-term view about the way israel should look like. >> for safety reasons, goldstein cut some shifts while his costs, storage, and staff has risen. >> we are paying extra salaries, providing like a risk premium. >> there are some things money cannot buy, and that includes

peace of mind. >> my wife, for the first time, me why are weask living here? why can't we move? it is hard. >> would you say? >> what did you say? from yournot run away home. >> willem marx joins us. how scared are people in those committees and factories? looks it depends who you speak to. some say they are getting -- >> it depends who you speak to. some say they are getting used to this. others have moved. the effect it has on businesses, they are worried about getting home to their children. it does seem to have an impact on their productivity. meects -- >> explained to more about why the -- explain to me why those villages in those

dangerous areas, they have experienced three conflicts in six years, why they want to stay ? >> there is some history. a lot of these communities moved down there over the last 30 or 50 years, and set up a small village and had to come up with a way of funding. they moved from agriculture to manufacturing, and those are now owned in majority by the community. it is difficult as a business to say we want to move because you are very much intertwined with the community in which you are based. kind of measures are these companies taking it all to protect their staff, to keep them safe? >> the primary one is building bomb shelters, and some people we spoke to say they have been doing that for the last 10 or 15 years. they are also sending staff home early so they can get back to their families. there are other things like paying the risk premium. you heard the guy in the package talking about paying more money

to some of their staff. >> the significant difference between the domestic and the export market -- in these types of periods, what did you find? >> israeli customers have been much more supportive. they're taking inventory off the books, paying earlier. international customers are saying we understand you are having difficulties, that is not really our problem. some businesses have said that they are concerned that long-term, if this uncertainty continues, international customers will go elsewhere. >> thank you. willem marx in tel aviv. coming up, only in texas -- builders of the world's largest backyard swimming pool anything financial details for the first time. plus, a former professor at mit's and his son are accused of running a massive hedge fund scam uncovered during their own probe into bernie made off.

details are next. ♪

>> we turn to today's bloomberg big number -- $3 million -- the cost of the world's largest backyard swimming pool. the company that dealt it is releasing details for the first time -- the 600 gallon monstrosity is warehouse, in texas, where they like things big. the owner built it large enough that his entire community of el campo could swim for free. the site set him back $70,000. there is a 500-foot lazy river.

the palm trees were flown in ofm florida for a cost $250,000. i want to be there because it is so darn hot in new york these days. it is 56 minutes past the hour. bloomberg tv is on the markets. equity futures are higher. morningame in this downgrading their forecast. ash way on investors weighed on investors, but not enough to bring the markets down. we are on the markets again in 30 minutes. coming up, buzz feed's recent , $850 million. the washington post, $250 million. i we headed for a media bubble burst?

-- are we headed for a media bubble burst? app. a clash over a loop," watching " in the live on bloomberg television and streaming on your phone, tablet, and on bloomberg.com. ♪

>> we are about 30 minutes away from the opening bell. you are "in the loop." i am betty liu. here's what we work -- what we are working on. stocks are slightly -- equity futures are slightly higher. -- putting its full-year forecast. macy's posting in earning that missed estimates. shares of the maker of the crush saga"andy down. it came digital missed estimates -- came to digital missed

estimates. for more on the game makers outlook, we are joined by tom giles. this is a huge headline because everyone has played or knows crushe that plays "candy ." >> we are all getting the invite to play on facebook with high school friends that we have not talked to in 30 years. a one-hity this is wonder, and where do we go from here. >> this is the challenge they face, a low cost of entry, you come up with a big game, huge sensation, and their low cost to make. it is a low-cost cost way to get into the company. the problem is they are boom and bust. they lose their luster quickly. >> >> we saw the same thing with zynga and "farmville." there is a danger of going down that same road. they constantly have to come up with the next digg thing.

tonext big thing. >> i have say, shame on wall street, because 11 of the 13 analysts that covered came to digital -- king digital had a buy rating. >> do they not learned their lessons? >> right. why were they so bullish? >> this is a company that did a good job of getting a lot of people to come into the game, and that come -- problems these companies face on mike on there -- unlike other game makers, there is not a lot of production value. the other game makers that have high production, games they get a lot of loyalty -- they are higher-priced, higher-margin, and they lock you in. they keep producing the titles. >> right, the titles and franchises that they build on. >> a lot of loyalty. you keep coming back, spend another $30, $40.

it is a very different model and there is something to it. >> what happens next for came digital? -- four king digital? >> they need to keep cranking out take hits to generate a lot of buzz and the need to bring in the developers that are going to be able to do that for them. address thatigital at all yesterday in their earnings? >> it is really tough to say where they go from here. wall street is really waking up to the fact that you need more than just a couple of one-hit wonders. >> that is right. you definitely do. you need to keep them rolling. tom giles, thank you for joining us. tom giles, of our technology team. moving and shaking this hour, tesla motors chairman and ceo elon musk. he is shrugging off criticism of magazine s by the

"consumer reports," and so our investors. tesla is trading at an all-time high. consumer reports said minor problems are appearing. tesla response -- they are always addressing her issues even when there is only a small chance of developing into a major problem. owners benefit from the company has of 20. let's switch topics to president obama. he has been bashing u.s. for cutting foreign merger agreements just to reduce their u.s. tax bill, but the people making many of those deals are not foreign to the president. they are some of his biggest donors. chief washington correspondent peter cook has more on these development. it turns out some of these in portions -- inversions are coming from his friends, a few of them here including roger altman. >> more than 20 of the president's donors are somehow

involved in these inversion transactions. they are either advising companies on these transactions, they are executives in these companies, or maybe they serve on the board of these companies. this is something that put some tension into these issues. he has called them corporate deserters. the fact that you have top donors to the president involved make this a more difficult issue and highlights some of the tension that some of the president's own supporters have been involved in some of these deals. >> the hypocrisy to some people, and attention. i want to play for you, peter, what roger altman said to us about this controversy, these inversions. eliminatingects for these incentives are immediate and it is understandable why a number of them have done that. it is understandable. in fact, the more of these that are done, the more companies, at least in some sectors say to

themselves that if i do not i will be at a competitive disadvantage versus my competitor who has just realized a lower tax rate. >> so, is that a wake up call at all to the white house, peter? something theis white house has said -- listen, the president is prepared to take on his own donors here, to give you some sense of how strongly he feels about this issue, and rbc does not know the exact details of all of his donors business transactions, but there are top democrats that have been involved. you mentioned roger altman. his firm has been an advisor to hire and it's inversion transaction. blair efrin is a major donor. advising on aeen deal that would allow a shifting of a tax residents to the netherlands for mylan.

he did not want to comment. the be the most prominent democratic example, heather , the, the ceo of mylan daughter of democratic senator joe manchin of west virginia. she donated to president obama's campaign in 2008, and joe manchin himself said it should -- we should go after these type of deals even if it involves his daughters company. the larger issue the democrats make and a lot of folks on capitol hill make say the solution here is corporate tax reform -- get rid of not just using version transactions, but clean up the tax code, lower the corporate tax rate, and you will not have these deals in the first place. >> and of course goes on to a longer topic, a longer solution, and it does not address the problem at hand right now that the inversions are happening and they continue to have it. peter, thank you so much, peter. peter cook, our washington correspondent ed major --

correspondent. buzz for buzzor feed. we'll could this mean for the traditional media, the print media business? we will get into that. ♪

>> when you want is this news, you come warehouse? you come -- where else? you come to bloomberg. to -- cap videos, you go t videos, you go to buzz feed. they are trying to get into news. $850 million for buzz feed. for "the washington post." get your head around that. we are joined by stephan paternot, the former founder and ceo of theglobe.com, which went

us during the.com boom of the early 2000. read, you are an old media and guy. do you go to buzz feed? >> infrequently. >> do you appreciate the power? >> absolutely. >> why? is viral. it is being passed along constantly from one reader to another. it is being shared. they are not develop -- dependent on their own website. it is really the sharing. >> so much comes from social media. it used to come from search, and it still does, but a lot of it comes from social media. "the new york times" admits it itself. >> it is the game changer. >> stephan paternot, when andreessen horowitz put in the $50 million and made the announcement, they said buzz feed was a media company that is

primarily a technology company. what is your reaction to that? was-- buzzfeed has mastered traffic building. they have turned what was an art into a science. they fully understand technology and the paradigm shift of how to leverage that for media. they are going from being a really powerful click-eight company, to actually never said fine and offering longform news items. andreessen horowitz -- these are long-term investors, and they have plans to diversify and supplant traditional media companies. >> i want to read for you a quote from a partner at andreessen horowitz who said -- isedin the same sense

a media company in the sense that tesla is a car company, uber is a taxi company -- they are trying to reshape industries from top to bottom. they have gone to be more of a substantive media company. nobody has tried to do that yet. can he do that, and do that with credibility? >> i think so. i think clearly what is interesting about the $50 million investment coming in is that the ceo of buzzfeedsaid it was to establish the brand. so far, they have been able to develop traffic without having a particularly strong brand, and they have been able to transcend the need for a strong brand by going directly to their audience and having the sharing taking place. now, they realize if they want to become a full-fledged media company of the future, they are going to have to build their brand. >> who is going to go to buzzfeed for the latest breaking

news? i might be biased, but who is? >> they will build up their video inventory, number one. they will establish a movie studio. they will start creating feature films. they are looking for ways to do it. i think there will be a lot of experimentation. i do not think it is the kind of thing where you flip the switch and all of a sudden everyone is going to their site. i think will take time. >> stephan paternot, though at. you should go ahead. >> the hardest part has been accomplished -- learning how to drive massive amounts of traffic. one company started out in one vertical and no one could imagine them getting out of that vertical, and it was amazon. they figured out that they could get everyone to buy books on their site, but who could have imagined everyone would be buying movies, refrigerators on amazon? the hardest part about building traffic and getting your brand

done, buzzfeed has done brilliantly, and even companies like "i think and post" are changing their model. post" areffington changing their model. when aol bought "the huffington post" everyone said tim armstrong was crazy. at $850have buzzfeed million. >> that is right. they turned it into absolute science. i would not be surprised if they have a corporate team of engineers analyzing traffic patterns all day long. raking that the core business needs they have a solid tech understanding, and now it is a question of saying what are the stories, what are the other things we could do with the brand. >> it is interesting, reed phillips, because tech investors use to avoid content companies like the plague them and now

they are all buying into them. >> they just to find that this is a media company, not a tech company. it is a media company that uses technology in a way other companies do not. , thank you fors joining us. stephan paternot of actarus funds, thank you. we'll be back in two minutes on "in the loop." ♪

namernie made off -- the comes out again. if you thought the fallout from the ponzi scheme was over, look again. and former nit professor and his son agreed to plead guilty to running a hedge fund scam that was uncovered by investigators probing bernie made off. we are joined with more. this is an incredible story about what nit professor and his son did together. >> it is incredible -- it is

sort of sad, greedy. >> greedy, yes. >> the story of a father and son who thought they could get into the business together, open a hedge fund, be successful, use the fathers trading model, but they sort of inflated to investors and said we have this model, the results, but the results were not real, and it money out they raised the from investors, lost some of the money, and regulators discovered this and realize they had lied about what they were doing. >> they lost a lot of money. >> $140 million. >> they paid themselves what? >> at least $600 million in fees. >> they raise about half $1 billion, much of this on the name of gabriel bitran himself. >> yes, his association with m.i.t., his claims of using a complex mathematical model.

could make it work, i think. he had done some theoretical results. it just turned out that he inflated his claims to investors, said he had used real money when he had not, and we showed a picture of his son, marco. they look like this, trustworthy guys. there he is. who would suspect they would be running a scam like this. doff?uspected bernie mae money they raise with investors they invested through the feeder funds, so what regulators were looking for ooftims of the bernie mad scheme, they offered information and it became unraveled. schemes came to life in a contrite manner when they are

expressing remorse for basically cheating their investors. >> fascinating story. kristi smythe of bloomberg news. we are a few minutes away -- on that note, from the opening bell. we have a top 10 stocks you do not want to miss out -- right before the opening bell. keep it here on "in the loop." ♪

>> first. bloomberg. >> welcome back. you are "in the loop." i am betty liu. it is 26 minutes past the hour. bloomberg tv is on the markets. here is a look at the latest on futures in the final moments before the opening bell. equity futures are higher despite some pretty dismal news on the american consumer -- macy's earnings, kate spade yesterday, and retail sales undershooting estimates as well. we are on the markets again in 30 minutes. the bulls seem to be back in place today. let's count down to the open with a top 10, the only stories you need to know about. olivia sterns and julie hyman join in. let's start with fuel cells. the firm has a three dollar ties

-- price target. they are surging more than 92%. -- fossil,ine, the who is optimistic on the future revenuefull-year forecast. it is offsetting weaker sales of leather goods. >> number eight is activision blizzard -- the upcoming "destiny shooter" game is the most pre-ordered video game ever. they are both due out in time for the holidays. good news for matt miller. the biggest competitors both 2015. back new titles to >> i cannot remember the last time i played. >> do your boys play? >> yes. >> probably not those. >> that is a game called "mind

kraft." >> these are seven-year-old boys. >> talking about toys, toys for men -- deere, they beat estimates but cut the full-year forecast. farmers are spending less on equipment. >> number six, ford. upgraded --lace steeple necklace has a 22 dollar price target. number five as amazon.com. the e-commerce giant is expanding yet again, this time into mobile checkout markets. amazon unveiled a new service called local register, an app that allows opel payments. >> a crowded market. >> it is. >> this gets everyone emotional -- seaworld. everyone has an opinion. shares are sinking in early

trade after the operator reported disappointing results and attendance for the second quarter. seaworld has gotten a lot of heat over the treatment of killer whales. >> even killer whales as they charged term. there is a politically correct term for these fish. not fish, mammals. excuse me. i am making mistakes all over the place. number three, kate spade -- they are down from a 30% gain in the first half of the year. yesterday, then news prompted shares to fall 25%, the most in five years, but the stock is now bouncing back in the premarket. >> they are slow and square. .umber two, king digital it is game over for the "candy crush" maker? king digital stock is down more than 20% this morning. getting crushed.

>> yes. "candy crush" eating crushed. -- getting crushed. cannot help that. macy's, number one, the department store chain losing its magic. they issued a murky outlook ahead, cutting stains or sales forecasts for the year by quite a bit. stocks opened this morning -- you just heard the opening bell. i want to bring in john manley, the chief equity strategist at wells fargo. hi. >> hi. >> even you would admit that we are at the levels -- some people feel valuations are stretched. some strategists say look, the party is over in stocks. one of them is the barclays chief equity strategist. i want to read his report that came out -- he said we believe u.s. equities are transitioning out of a recovery rally and into as thed of lower returns benefits of margin expansion and share repurchases through to the president -- proved to be priced in and the return to revenue

growth becomes a prerequisite for another remaining higher. would you agree? >> i do not think the party is going, and the champagne is not god. the fizz comes from the fed. .> it is closer >> it is closer than a year ago. there is a famous quote -- greek tragedy -- what it means is we get crazy before it is all over. i do not see any signs. this would be an early end to it all. >> what would be crazy? >> the multiple going from 15, 16 times on forward fundamentals now to 20 times. you have not seen one sector catch fire. you have not seen a ball joint people had to get into the. >> back to the issue of margin expansion, i want to take a chart from berryman holtz, a columnist from bloomberg you.

10% growth year-over-year, the strongest gross -- growth since 2011. the upward surprise -- when you see that, do you think this is the time to buy, stocks are cheap, they will keep heading up? >> that is a remarkable graph. >> i do not think they are cheap, but i do not think they are overvalued. we are in the middle by historical standards. i think the earnings numbers are starting to get better. look at it, we have had no help from the economy, really, and corporate earnings have expanded genetically. if they have done more with less, what happens when they get a little more on the top line? i think there is more there. >> what are the areas where the economy continues to struggle is retail and we saw that this morning. -- thenothing for them corporate earnings at macy's. how concerned should we be about consumer spending? >> i do not think that content.

my great grandparents came over here to buy things for each other. this is the way america works. we are playing to a national trend. retail is a funny area. it depends on the context. i go to brooks brothers. i have gone there since i was 20 years old, i will not change. some things go in and out of fashion. you miss the fashion. you get it wrong. retail, selling things to people with a grain of salt. >> we're not just talking about clothing. verse,l sales electronics were down, we're not just talking about close, other types of goods as well. >> i would admit that there has been a bit of a slowdown in the housing market, but housing is always the igniter. first of all, it had to be fixed. it was a huge, gaping wound. i think the fed fixed it. it has to provide some sort of support. it does not have to do what he did before. i think the verve of the economy has sort of moved on up to the

capital expansion side. i would rather own technology stocks, playtrial energy td expansion of hydrocarbon capacity. i think that is what is going to be marginally better. >> that has not quite happened yet. invest is why i want to now. >> investors have been taking their cash and helping you as a shareholder, buying -- paying out dividends and doing buybacks, but they have not yet spent on. take deere this morning. worldt" is the operable -- word. they will. you've run into the problem where your competitors start to expanding you do not. i think capital expansion follows, now leads. when one starts to do it, and they start picking up market share, it can turn very quickly. likehn manley, it sounds you could find a bullish case

for almost every scenario here, right? i am curious, do you feel better investing this year than you did last year? quick note. no.> last year, there was real fear. i think we could make money as the economy goes from terrible ok, ok toad from mediocre, and mediocre to good, and eventually from good to great. >> and then from good to very good, to great. is made whenoney it is most painful to make it when you really have to go against the grain. on the other hand, look at what happened to sentiment in the last month or two. look what happened to sentiment. the expression, it is a mile high, but an inch deep. more of a series of bull market corrections. >> on that note, thank you for joining us, john manley, at the

open, and of course, to olivia and julie as well. coming up, following the mcdonald's franchise fight, we will speak with a dunkin' donuts franchisee whose family owns as many as 700 dunkin' donuts stores. he will take on the thorny issues to come. we will also hear from chuck hagel on the additional 130 u.s. military advisers heading to iraq to help the struggling government counter a rabbit militant threat. -- rabbit militant threat. waste a few minutes into the session. state -- we are just a few minutes into the session. stay "in the loop." ♪

>> it is a big week for retail. walmart, target reporting results. macy's reported this morning. earlier, we got data that showed retail sales in july were pretty much lackluster, flat. for more on the health of retail, we are joined by "market makers" anchor erik schatzker

because he will be talking about the retail health in his show. >> more likely the poor health of retail. the retail sales numbers were little changed, effectively zero. economists were looking for a .2% increase, and all of the excitement that we saw around retail building after the cold weather in january -- retail january, 1.5%in in march. all of that enthusiasm and excitement is gone effectively now. >> yeah. >> and you see that in result for macy's, $.80 a share. analysts were looking for $.86 a share. it is a big miss for what has been an exterminator retail success story in the post-crisis period. >> and they mentioned they had a hard time making up for first-quarter losses.

they thought as well that everyone would get out and start shopping after the dismal winter. >> are two things happening -- retailers across the board are confronting the challenge of e-commerce. e-commerce forces you to mark down your goods. either everyday low pricing -- you have heard that before, or discounts. macy's, for example, has to run more clearance sales, more friends and family discounts. >> which i like. >> of course. we shoppers like it. terry lundgren cannot stand it, right? [laughter] on the other hand, there's another structural phenomenon at work in retail, which is consumers are still making big ticket purchases they put off in the years after the financial crisis. cars, for example, the average car on the road is 11 years old, the oldest it has ever been, so a lot of people are buying cars, and we see that, but that has an impact on other retailers like walmart and nordstrom, which

will also be reporting earnings, or in this case, macy's. >> you have the ceo of one of my favorite stores, the container store. >> i have to admit, it is one of my favorite stores. if you live in new york city, and you are space can strain, -- constrained, you are forced to look for solutions. tindell will be with us in the 11:00 hour to talk about how he is doing business in 24 states and the district of columbia, and how he is going to revive the companies prospects. >> and by the way, it is our favorite store because it is right downstairs from the office. >> it is in our building. >> erik schatzker, thank you. tune into "market makers" starting at 10:00 a.m. mcdonald's has come under fire with franchise owners after the national labor relations board ruled that qualified as a joint

owner. we dug deeper, highlighting the ownership its franchisees really have, and how the labor agency's decision could threaten the entire system as we know it. we are joined by the vice chairman of the coalition of franchisees association, and he himself is a franchisee himself. he owns about 60 dunkin' donuts in the new england area, and is it true, your family owns more than 700 dunkin' donuts? >> good morning, betty. yes. many of us, brothers, sisters, cousins, espouses. a huge number of people. >> it is a family business. [laughter] all right. >> very much so. >> robert, how do you feel about this labor force decision -- are you incensed by it? >> it is only the opinion of their general counsel. it has a long way to go. would it seeks to do is change a decade-long legal standard about

what an employer is, and the standard was in place to avoid ms.ng people classify -- classify to employees as independent contractors, and it confuses the complex nature of franchising, which, if you are outside of our world, it can look like another planet. >> why? give me one reason why. works well, franchising covers many industries, and mcdonald's is different than dunkin' donuts, for example. mcdonald's is as much in the real estate business as they are the burgers and fries business, whereas at dunkin' donuts, we own all real estate, we develop it, we control construction. all of the development is ours. the distribution the supply chain -- we are spots before all of that. curious,, well, i am are your margins -- you know, better at dunkin' donuts and they are and mcdonald's?

excited not know what their margins are, and again, our knowess -- >> i do not what their margins are, but again, our businesses, every store is different. our shops are different than others. they are different in our industry and that is why you see multi-unit owners, to expand our ability to make a living and provide for the next generation, we open more units. >> this is what i want people to understand about why this is such a controversial issue -- i can understand why franchisees do not want any more control from the head corporate office -- they want to run their own business, the mcdonald's franchisees say they are operating on razor thin margins, and they get told already too much by mcdonald's what to do, and you know about this case, catherine slater-carter in california, trying to push this bill through to get more freedom to get out from under mcdonald's, and she wrote this piece that i will quote it ,uickly -- if workers unionize

the biggest negative effect would be that corporations, the big guys, could not suck as money off the top. i have mixed emotions on unions, i think union benefits are sometimes over the top, but the little people are getting screwed. how do you feel? >> i would disagree with that, and i can speak to our system and some of the other systems that are members of our association. that probably is not true for us , but this and rrb ruling is -- nlrb ruling is about getting members. eiu, if they were able to unionize, they would have $850 million in dues they do not have now. it is about the money and the business model, and i'm not saying that the union is good or bad. if you are a coal miner, you probably need a union. whether or not one shot as opposed to another shop needs to be unionized because of working

conditions, i do not know, but again, it is a workplace by workplace model to organize a workforce. >> and it has been hard for them. >> yeah, it attempts to change the law to make their job easier than it has historically been. sot makes me wonder if it is difficult to organize these workforces, perhaps because the workers are not interested, and the ones that are, they should be able to organize into a union. --then, of course, the si seiu would say they are, but it is a big process going to restaurants to restaurant to coalesce workers, then you could do if they were in fact under one about. robert, there is so much more to this story. we will bring you back on. thank you for joining us, robert branca, the dunkin' donuts

franchisee, and the vice president of franchisee relations. fears that vladimir convoy might actually be explosives. we will be back in a moment. ♪

>> time for the global outlook -- the u.s. is sending 130 -- military advisers to the -- to iraq. defense secretary chuck hagel told marines that this is not a combat, boots on the ground operation. >> i would also say that it follows the criteria that president obama has made very clearly, that this is not any extension of any role other than -- for the united states, other than to find ways to assist and help advise the iraqi security forces, which we have been doing. >> well, that convoy that russia says is carrying humanitarian

aid approaching the ukrainian border -- there is no agreement for a two cross. russia says it is carrying food and water on the trucks and the ukraine fears and might be carrying aid for pro-russian rebels. such an interesting story -- south korea's space program has come to an end because the country's own -- only astronaut has quit. she says she is leaving the program for personal reasons. she flew into space once. the space program costs of korea $28 million, and it is gone because she is gone. that does it for today on "in the loop." will be the dish coo joining us because tomorrow for the first time they will be accepting bitcoin for payment. that is tomorrow that :00 a.m. eastern time -- that is tomorrow at 8:00 a.m. eastern time. ♪

>> well it is 56 minutes past the hour. bloomberg tv is on the markets. i am olivia sterns. we are about 30 minutes into the trading day. let's get you caught up on where stocks are trading right now. equity markets are broadly trading a little higher today after yesterday's decline with

investors focused on retail sales that came out a little soft this morning, showing they are barely growing in the month of july and amidst tepid wage growth. investors are focused on earnings. this morning, soft growth from both deere and macy's, and keeping an eye out from -- for reports from cisco after the bell. the yield on the 10-year treasury note down by about two basis points, trading that 2.4256%, the lowest level in a year. sticking with bonds, it is a tough year for the so-called bond king him bill gross. his total return fund has lagged peers and seen 13 months of stalled growth. joining me now if they look about what this says about sherry g is bloomberg news -- strategy is bloomberg news' susan walker. he has been betting on the short end of the curve. what does this tell you about

how his strategy has changed? >> his strategy has not changed, per se. the larger scheme of things -- the 45% holding of government that still provides -- comprises the majority of holdings. he is still betting the fed will not be raising rates anytime soon and because of that, --rter-term rates are way where you are supposed to become it is just a weak spot, in his words. >> how is he changing the mix of his funds? >> he has cut its slightly, and that is actually down from above 50% in may. so, even though we see some sort of a cutback, he is still saying that central-bank policy here and around the world is going to be very accommodative for a while. >> yes. >> yes, interest rates will remain low for a while, so shorter-term treasuries are the place to be. >> he has moved from the so-called new, to the new

neutral, where rates are going --stay here >> shared by stay. >> it is a view shared by jeffrey garlock at double line capital. why is bill gross not making money, why is he underperforming peers? >> in general, people believe the fed will be raising rates next year, so investors are a little perturbed, and data not want to suffer losses. they figured if the fed raises rates next year, they will be losing money, and did not want to do that. so, they have pulled out of the fund. i think last month we saw a hundred $30 million in withdrawals, and that is actually -- $830 million in withdrawals, and that is the smallest since investors are to point out about one year ago. people are doing this because a longer-term part of the treasury curve has been outperforming shorter-term treasuries. so, for instance, with treasury that are 10-plus maturity, we've

seen returns of about 15%, whereas treasuries between one and five years, we have seen returns of .9%, less than 1%, so you would see why investors are running for the gates. >> quickly, what is the outlook for the u.s. treasury market for the rest of the year -- where'd you see the smart money you -- the smart money tell you 10-year treasuries are for the rest of the year? they would god up, and we're not seeing that. they have dropped from about the multi-percent. people estimate that it will be about 3%. >> we have to go. thank you for joining us, susanne walker. we are on the markets again in 30 minutes. >> thank you. ♪

♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> king digital are plunging. we will tell you why gamers don't have that sweet tooth anymore. a warned buffett calls it financial weapons of mass destruction. >> salad chain wants to expand beyond the east coast but with american scope or green?